With GICs, generally the longer the term, the higher the interest rate paid, but you might not want to lock all your funds into the longer term maturity. A GIC laddering strategy lets you maximize your returns and also give you access to cash flow each year.

How does it work?

Your principal can be divided into 5 portions and invested in different GICs for terms of 1-5 years.  Each year as a GIC matures, the maturing amount (original investment plus return) can be automatically reinvested for a 5-year term. You can then repeat this strategy each year as a GIC matures. The 5 year term is commonly used in a GIC laddering strategy because 5 year terms typically have the highest insured rate available.  When your GIC matures, you can, however, always reinvest in a different term if your time horizon has changed for when you’d like to access the money.


5-year GIC Laddering Strategy


How does this benefit me?

Access to your money – By using this strategy you have a portion of your money available each year as a GIC matures, and you can access some or all of the money at that time, or reinvest it. 

Returns – A laddering strategy may provide you with a higher overall annual rate of return than if you invested all your money in consecutive short-term GICs, because your money is spread across different GIC terms with higher interest rates.

Rising interest rates – One of your investments matures each year which allows you to take advantage of a current best rate when you reinvest.

Guarantees – Buying GICs with a fixed interest rate guarantees your principal and return at the end of the term.  

Laddering can be a great solution for your GIC planning needs; once a strategy is developed to meet your investment goals and the laddering is put into place, your GICs go to work for you – guaranteed.